WP_23_TheRoleOfInstitutionalInvestorsInFinancingCleanEnergy.pdf

Created by asif on Oct 3, 2014 9:19 AM. Last modified by asif on Oct 3, 2014 9:19 AM.

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Decarbonising the world‟s energy system to avoid locking-in polluting technologies and unacceptably high emission levels will require doubling existing investment levels to around USD 2 trillion a year or 2% of GDP. Governments understand that large sums of capital will be required, and many are also realising the need for further recourse to private capital as public finances have become strained in many developed countries. Simultaneously, banking sector provision of long-term finance has become tighter due deleveraging and new financial regulations. With their USD 71 trillion in assets, institutional investors potentially have an important role to play. Given the current low interest rate environment and weak economic growth prospects in many OECD countries, institutional investors are increasingly looking for real asset classes which can deliver steady, preferably inflation-linked, income streams with low correlations to the returns of other investments. Clean energy projects may combine these sought-after characteristics.